Question 2 Refer to Scenario below to answer the following questions. The government of Stratospheria is currently inviting investors to bid for the exclusive right to provide cable television service to its residents. The market demand for this service is P-55-0.01Q, where Q is the number of households that would subscribe to the cable service and P is the monthly fee charged to the subscribers. The associated marginal revenue curve is MR-55-0.02Q. Fun Cable Company is interested in bidding for the right to provide cable service in Stratospheria. It has a constant average and marginal cost of RM5 for providing cable service to each household. 2.1) If Fun Cable Company were to be awarded the exclusive right to provide cable service in Stratospheria, how many households would it service? Working calculation: 2.2) If Fun Cable Company were to be awarded the exclusive right to provide cable service in Stratospheria, what price would it charge per houschold per month? Working calculation: 2.3) If Fun Cable Company were to be awarded the exclusive right to provide cable service in Stratospheria, how much profit would it earn? Working calculation:

Question 2 Refer to Scenario below to answer the following questions. The government of Stratospheria is currently inviting investors to bid for the exclusive right to provide cable television service to its residents. The market demand for this service is P-55-0.01Q, where Q is the number of households that would subscribe to the cable service and P is the monthly fee charged to the subscribers. The associated marginal revenue curve is MR-55-0.02Q. Fun Cable Company is interested in bidding for the right to provide cable service in Stratospheria. It has a constant average and marginal cost of RM5 for providing cable service to each household. 2.1) If Fun Cable Company were to be awarded the exclusive right to provide cable service in Stratospheria, how many households would it service? Working calculation: 2.2) If Fun Cable Company were to be awarded the exclusive right to provide cable service in Stratospheria, what price would it charge per houschold per month? Working calculation: 2.3) If Fun Cable Company were to be awarded the exclusive right to provide cable service in Stratospheria, how much profit would it earn? Working calculation:

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter16: Government Regulation

Section: Chapter Questions

Problem 6E

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Refer to Scenario below to answer the following questions. The government of Stratospheria is currently inviting investors to bid for the exclusive right to provide cable television service to its residents. The market demand for this service is P=55-0.01Q, where Q is the number of households that would subscribe to the cable service and P is the monthly fee charged to the subscribers. The associated marginal revenue curve is MR=55-0.02Q. Fun Cable Company is interested in bidding for the right to provide cable service in Stratospheria. It has a constant average and marginal cost of RM5 for providing cable service to each household. Question：1）What is the most Fun Cable Company would bid for the franchise?(please show the steps of calculation)
Hotel Del Luna has 10 rooms with a marginal cost of $20. During the high season, the demand equation is QH = 700- 2PH, where QH is the number of rooms and PH is the room %3D rate per night during the high season. During the low season, the demand equation is Q1, = 420 PL, where QL, is the number of rooms and P, is the room rate per night during the low season. What is the profit-maximizing room rates during the high season (PH)? O PH= $700. %3D O PH = $420. PH = $345. %3D PH = $300. None of the above.
A monopoly produces a good with a network externality at a constant marginal and average cost of c-$2. In the first period, its inverse demand curve is ← p10-10 in the second period, its inverse demand curve is p-10-10 unless it sels at least Q 8 units in the first period. If it meets or exceeds this target, then the demand curve rotates out by a (t sells a times as many units for any given price), so that its inverse demand curve is The monopoly knows that it can sell no output after the second period. The monopoly's objective is to maximize the sum of its profits over the two periods. For what values of it would the monopoly earn a higher two-period profit by setting a lower price in the first period? Ifa is greater than (round your answer to two decimal places)
In many areas (including sections of New York City) cable TV service is provided by a single producer. The graph below depicts the demand for monthly cable TV in one such town, Little Apple. BurnU Cable is the sole provider of cable services in Little Apple. Its monthly costs of providing services to a household are constant at $10 per household. In addition, the annual cost of maintaining the overall system of cables is $2,000. 110 100 90 80 70 60 50 40 30 20 10 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 Households A. How many households will purchase cable TV services and at what price? Quantity: Price: В. The mayor of Little Apple is interested in lowering the cost of cable TV and has proposed regulating the price at $30. His summer intern (all the way from Wagner) recalls that regulation causes inefficiency and argues against this strategy. Is the intern correct? O Yes O No What are the efficiency consequences of imposing the price regulation of $30…
map/ihdex.html?_con=con&external_browser%3D0&launchUrl=https%253A%252F%252Fnewconnect.m.. Because of their unique expertise with explosives, the Zambino brothers have long enjoyed a monopoly of the European market for public fireworks displays for crowds above a quarter of a million. The annual demand for these fireworks displays is P= 160 - 1Q. The marginal cost of putting on a fireworks display is 55. A family dispute broke the firm in two. Alfredo Zambino now runs one firm and Luigi Zambino runs the other. They still have the same marginal costs, but now they are Cournot duopolists. How much profit has the family lost? (Round your answer to 2 decimal places (e.g., 32.16). Negative answer should be indicated by a minus sign.) 00:24 P Type here to search 14/02/2022 acer
Sal's satellite company broadcasts TV to subscribers in Los Angeles and New York. The demand functions for each of these two groups are: QNY = 60 – 0.25PNY QLA = 100 – 0.5PLA where Q is in thousands of subscriptions per year and P is the subscription price per year. The cost of providing Q units of service is given by C = 1000 + 40Q where Q = QNY + QLA: a. What are the profit-maximizing prices and quantities for the New York and Los Angeles markets? (round all answers to two decimal places) In New York, the equilibrium quantity is subscribers at an equilibrium price of $. While in Los Angeles, the equilibrium quantity is subscribers at an equilibrium price of $.
Problem 2Suppose an airline has monopoly over a certain route. The estimated price elasticity of demand for business travelers is EB=-1.9, while the price elasticity of demand for leisure travelers is EV=-2.1. The airline wants to set the prices separately for business and vacation travelers.a) If the marginal cost of transporting each passenger is the same, and the airline is able to separate the two groups perfectly, what is the optimal surcharge (in %) on business travelers? (for example, if leisure travelers pay 100, and business travelers pay 200, then the surcharge is 100%)Answer= b) Suppose that in order to separate business travelers, the airline must offer them slightly better conditions on board (for example, serve them a meal). As a result, the marginal cost of flying a business traveler is 30% higher than for a leisure traveler. What is the optimal surcharge (in %) on business travelers in this case?Answer= c) Now suppose the airline introduces a Basic Economy fare, where…
Consider PNW Airlines, an airline focused on transporting cargo. Their fleet is composed of four cargo airplanes. Total cargo capacity of the fleet is 100,000 cubic feet. The monthly cost of maintaining and operating the fleet is $50,000. Market research indicated that the demand curve for cargo capacity is d=300,000-25,000p where d is the demand across all segments and p is the transport price per cubic foot. What is the price that maximizes profit for PNW Airlines if all the demand comes from a single segment?
The global pandemic 2020 has promoted a race to capture the market for introducing effective vaccine and treatments. If PFIZER is the sole vaccine provider given the following information, answer the questions below: Output Price/Unit Total Cost 1 5500 1000 2 5000 1200 3 4500 1500 4 4000 2500 5 3500 4000 6 3000 5700 7 2500 7500 8 2000 9400 9 1500 11400 10 1000 13500 Given the tabular information above find the profit-maximizing output and price also illustrate the same using the two-dimensional labeled diagram. Show the calculation as well. Assume if many firms enter into the business of providing vaccine determine: How the demand curve of PFIZER would change and how it would now maximize its profit? The kind of market structure now PFIZER is forced to operate in? Also, illustrate the same using the two-dimensional…
Assume Ghacem Limited (Ghacem) continues to enjoy monopoly power over the production and sale of cement products in Ghana and operates with marginal costs of Ghs10 and sells to two sets ofconsumers. It is estimated that each set ofconsumers is made up of20 buyers. The individual demand function for the first set of consumers (A) is given by: QA(P) = 20 - P; and for the second set of consumers (B) it's given as: QB(P) = 16 - P; Using the above information estimate market output(s), price(s) and profits for both set of consumers under the following condition(s): 1. If Ghacem cannot prevent arbitrage ii. If Ghacem is able to prevent arbitrage but has no knowledge about the type of consumers it is dealing with. iii. If Ghacem is capable of preventing arbitrage between the different set ofconsumers but not within consumers in the same group. iv. If Ghacem can now identify all its consumers and can prevent arbitrage both between and within groups of consumers.
QUESTION 8 The table below shows how much the a non-Manchester United fan and a Manchester United fan would pay for an annual subscription to Manchester United TV. The marketing team at Manchester United decides to offer two packages: a basic package that includes all games of the main, youth and women's teams (delayed by one day) and a deluxe package that includes the games (delayed by one day), recording of games from past seasons, and exclusive player interviews. Because there are many more non-Manchester United fans, the marketing team decides to offer the basic package for $30 to attract these fans. What is the maximum price they can charge for the deluxe package if they want Manchester United fans to subscribe to the deluxe package rather than also subscribing to the basic package. Manchester United TV Subscription (annual) Value to a non-Manchester United soccer fan Value to Manchester United fans Basic Package $30 $120 Deluxe Package $40 $200 O 119.99 O 109.99 189.99 O 179 99
Problem 11-01 Based on the best available econometric estimates, the market elasticity of demand for your firm's product is -3. The marginal cost of producing the product is constant at $100, while average total cost at current production levels is $175. Determine your optimal per unit price if: Instructions: Enter your responses rounded to two decimal places. a. you are a monopolist. b. you compete against one other firm in a Cournot oligopoly. c. you compete against 19 other firms in a Cournot oligopoly. %24 %24 %24